Researchers have found a ‘positive side’ of Bitcoin System among merchants. Yes, these merchants readily accept crypto for their goods and services. However, the question is whether or not the manifested advantages of doing so exceed the associated risks.
For the first time, in 2010, Laszlo Hanyecz paid 10,000BTC to purchase takeaway pizzas from a crypto fan. Well, that’s what the record holds. Talking about the value of the crypto transaction, it holds up to £25 (approx. in 2010). If he’d kept back the carbs and dwelled on that money, he would have earned about £5bn at bitcoin’s peak.
More surveys indicate that around 64% of consumers have an expressive interest in digital currencies. And 85% of merchants considered crypto payments soon to be everywhere among suppliers.
Cryptos make progress in a chain. And so, it won’t be wrong to conclude that other cryptocurrencies, besides bitcoin, like Ethereum, Solana, and Dogecoin, have also suffered a sudden crash. All the above factors account for some basic questions for any organization wishing to take cryptocurrency payments.
Advantages of Accepting Crypto Payments
Assistant professor of Finance and Accounting at Rennes School of Business believes that businesses that accept payment in digital coins can benefit a lot. He highlights some of these benefits –
- Quicker processing times (for both local and international payments)
- Higher transparency while transactions
- Minimal transaction fees
As per the professor it is charged only 1% to a customer from the transaction charge. Digital tools like Coingate or Bitpay supports such minimal transaction fee. When comparing this to the credit card processors, the standard fee ranges to 2.9% plus 30¢ per transaction.”
So, it is claimed that the underlying mechanism of crypto assets is to re-compensate participants for processing transactions. Still there is an another option. Bitcoin is one of the oldest cryptocurrencies, so here the transaction charge is relatively higher than the new coins. The average transaction fees for BTC and ETH shift from either £12 and £35. And so one can conclude that ‘higher-value’ transactions hold more significant benefits.
Be it as it may be, Bitcoin has developed its new technology called ‘The Lightning Network.’ Here, the transaction fee is valued as low as 0.00000001BTC. This is its smallest tradable unit which can be transferred for at least 1 million transactions per second.
Roman Matkovskyy, the Associate Professor & Director of MSc Financial Data Intelligence, said, “because of the low fees criteria, the Bitcoin Lightning Network along with Solana Pay has the potent to replace existing payments for fiat transactions.”
How to Avoid the Instability in Crypto Payments Transaction Fee
Crypto coins are volatile. It’s due to this nature that cross-hatch the transaction fees. You do not have ground in saving a percentage point on processing costs if the currency you trade with had to undergo a downfall of value by 10% in a week.
The good news, you can steer clear of the volatility altogether. Stick to stablecoins – a crypto coin pitched to a traditional currency like the dollar. Stablecoins are many; some of the most popular ones are Tether, Binance USD, and dai.
The product manager of crypto at FIS, Jordan, says, “Both seller and buyer can escape from volatility altogether. Customers should pay heed to the exchange rate shown while making transactions. And Merchants have the freedom to receive a settlement in fiat. These two tricks can certainly offer regarding the amount.”
Bentley further claims, “Using stablecoins like Circle’s USD coin, pegged at 1:1 with the dollar, can hold off volatility for the long term. Both merchants and buyers should gain an understanding of stablecoins.”
However, different people have different views, and so is the scenario with Stablecoins. Take Tether – the most popular stablecoin, that alleged offense with “improper transparency.” The New York Times presents an article with a sensational headline, “Tether: the stablecoin likely to wreck crypto.”
Billy Markus – the programmer at IBM and the creator of Dogecoin, ventured, “For all those who bother about the collapse of Binance or tether, remember if tether falls, that’s the end of the game.”
What’s the Final Takeaway?
People hold doubt about crypto and the claims raised on behalf of crypto advocates. Accepting payments in pounds, dollars, and euros is less convenient than a crypto transaction because of the transaction fee. But one must keep in mind that the CEO of any Central bank will not steal all of the customer’s money. Who knows this might be the case with crypto payments. So, let the buyer be aware, i.e., caveat venditor!